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How a curious VC found Uber before anyone else and helped net his firm a stake thats now worth $2.5 billion

Rob Hayes led First Round Capital’s early investment in Uber. The company was only worth $4 million then; now it’s worth $3 billion more.Flickr via Loiclemeur

On July 4 2010, Rob Hayes’ family was not happy with him.

He spent too much of the holiday on his phone, trying to organize an investment in a new, unproven startup.

Hayes had learned about Uber a few months earlier when he saw a tweet about it from Garrett Camp. Camp founded Uber; he also ran StumbleUpon and sold it to eBay. Hayes’ firm First Round Capital (FRC) had backed StumbleUpon. Hayes emailed Camp to ask what Uber was.

Uber, Camp told him, was a startup that promised to solve transportation problems in San Francisco. Cabs in the city were scarce but with Uber, you could hail a nearby black car from your iPhone and it would pick you up in minutes. It was an on-demand black car service that only cost 1.5 times more than taxi; it was a luxurious, reliable ride.

If Hayes’ family wasn’t happy with him then, it should be now.

Uber went public Friday at a $75.5 billion valuation. When Hayes and First Round Capital invested, Uber was seeking a $1 million seed round at a $4 million pre-money valuation. First Round Capital’s initial and follow-on investments in Uber are now worth about $2.5 billion, according to The Wall Street Journal.

First Round Capital was the first institutional investor in Uber. It committed about half-a-million dollars; other investors included Napster co-founder Shawn Fanning and Mitch Kapor.

First, Hayes led the Uber investment, but he wasn’t the firm’s only point of contact in the startup. Josh Kopelman, Hayes’ partner, had heard about Uber from Camp too. They sent Chris Fralic, another First Round Capital partner, to watch Uber pitch later that summer.

Fralic attended an event called Open Angel Forum in San Francisco. The forum was set up by investor and entrepreneur Jason Calacanis; Chris Sacca and Digg’s Kevin Rose were its “chapter heads.”

Uber cofounder Travis Kalanick went on stage and pitched the room of investors. Ryan Graves was Uber’s CEO at the time and Kalanick served as a “mega advisor.” Calacanis announced that he’d be investing in Uber; Chris Sacca’s fund, Lowercase Capital, invested too.

Then, Fralic’s hand shot up.

“I’m in for $500,000!” First Round Capital’s Chris Fralic announced.

A bystander remembers thinking Fralic was crazy. Uber wasn’t a relatively hot deal to invest in and it wasn’t clear how big the market opportunity would be.

What this person didn’t know was how much work First Round Capital had done before that event to find, snuff out and secure the Uber deal. And it all started with a tweet and an investor who was curious enough to follow up.